Analyst says Boeing may be down, but it’s not out in USAF tanker competition

The Boeing Co.’s hopes of winning the U.S. Air Force’s $40 billion tanker contract may have waned, but the aerospace giant hasn’t yet thrown in the towel.

The company isn’t talking about the contract, but Loren Thompson, a defense analyst with the Virginia-based Lexington Institute, says the company is looking at anything it can do, including pricing adjustments, to make its offer more appealing.

And that’s a piece of good news for the local companies that would see tanker work if Boeing wins.

“I think as they see this thing drift away, the Boeing team is doing everything they can to make this a more attractive offer,” Thompson says. “It’s true to say that Boeing has sensed its prospects dimming. But it’s not correct to say they have given up.”

Boeing’s spokesperson on the tanker program, William Barksdale, declined to comment on whether the company is modifying its bid.

'Big loss for Wichita'

Thompson set off widespread speculation earlier this month after asserting in a report from the Mobile Register in Alabama that Boeing realized how far behind tanker rival European Aeronautic Defense and Space Co. it was, following a document mix up that gave each company information about the other’s bid.

That was a troubling development for local subs who hoped Boeing would be named the winner of the nearly decade-long tanker battle.

Boeing has said the tanker contract would mean 7,500 jobs in Kansas, but didn’t say how many jobs it would mean at its defense facility in Wichita.

A handful of companies already have been named part of the tanker supply team, including Spirit AeroSystems Inc., Kaman Aerostructures, Machining Specialists Inc., TECT Aerospace Inc. and McGinty Machine Co.

Boeing losing the tanker “would be a big loss for Wichita,” says McGinty president Don McGinty.

And, like Kansas’ congressional delegation, McGinty says it’s not fair that the Pentagon says it won’t factor in the ruling by the World Trade Organization earlier this year that EADS, the European parent of Airbus, received illegal subsidies that included money directly funneled to the development of the A330, the basis of its KC-45 tanker model.

However, the WTO found in September that Boeing also received subsidies.

No protests yet

To some, the continued specter of WTO rulings and the Air Force’s recent document foul up seem to indicate that the tanker saga is far from complete.

“I’m not optimistic that Boeing is going to win the contract,” says Steve Cox, whose company, Cox Machine, would pick up some work if Boeing wins with its 767 tanker model. “But, I’m not real optimistic that it’s even going to be awarded.”

The Air Force had hoped to award the contract this year, but pushed that date back to early 2011.

Thompson, the aviation analyst, believes it will be awarded by the end of January.

However, he doesn’t believe Boeing has gone any further than taking steps to try and win the contract when it’s awarded.

“I don’t think Boeing is ready to think about things like protests yet,” Thompson says. “That’s because it’s incredulous that it would even lose.”

2010 tanker time line
February — U.S. Air Force releases newest request for proposal on tanker program.
March — Northrop Grumman Corp., EADS’s U.S. partner, drops out of the tanker competition.
April — Bid deadline is extended by 60 days.
July — Air Force receives bids from Boeing and EADS, says contract will be awarded by the fall.
November — Air Force pushes award date into early 2011.